SAN FRANCISCO -(Dow Jones)- Microsoft Corp. (MSFT) has "better options than a full combination with Yahoo Inc. (YHOO) at the price it suggested," Kevin Johnson , Microsoft's president of its platforms and services division, said in an email to employees Friday.

Johnson, who is responsible for the Redmond, Wash.-based software company's advertising businesses, said the company had "moved forward on our strategy to grow our online business," but said that Yahoo, which Thursday announced an Internet search deal with market leader Google Inc. (GOOG), had missed a valuable opportunity to create value for its shareholders.

He also highlighted competition risks to the Google/Yahoo deal.

In the email, Johnson fleshes out details of Microsoft's failed proposal to buy a stake in Yahoo's search business, which, he says, would have transferred to Yahoo $9 billion in cash that could have been used to reward their shareholders.

He also highlights Microsoft's belief that the deal Yahoo announced with Google is potentially anticompetitive, consolidating over 90% of the paid Internet search market in Google's hands.

Johnson confirmed that Microsoft would have invested $8 billion in the Sunnyvale, California-based company at $35 per share.

Microsoft would have then purchased Yahoo's search business for $1 billion and assumed the research and development expense, returning back to Yahoo data for use in its advertising business.

Microsoft would have entered into a "long term search partnership," Johnson said, which would have provided "favorable economics to Yahoo search, including a three-year guarantee of higher monetization than Yahoo's Panama paid search system currently provides." Panama is Yahoo's paid search advertising platform.

"Taken together, we believe that our proposal would have created total value for Yahoo's shareholders in excess of $33 per share."

"Unfortunately Yahoo has chosen a different course, and yesterday announced an agreement that would start to consolidate over 90% of the paid search advertising market in Google's hands," Johnson said.

"This will make the market far less competitive. There are many experts who suggest that a host of legal and regulatory problems lie ahead for Google and Yahoo."

Microsoft's shares closed up 83 cents, or 2.9%, at $29.07 Friday. Yahoo's shares closed down 5 cents at $23.47.

- By Jessica Hodgson , Dow Jones Newswires; 415-439-6455; jessica.hodgson@ dowjones.